Chung Mon has been the CEO of Perennial International Limited (HKG:725) since 2005. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Chung Mon's Compensation Compare With Similar Sized Companies?
Our data indicates that Perennial International Limited is worth HK$173m, and total annual CEO compensation is HK$4.8m. (This is based on the year to December 2018). Notably, the salary of HK$4.6m is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.8m.
It would therefore appear that Perennial International Limited pays Chung Mon more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Perennial International has changed from year to year.
Is Perennial International Limited Growing?
On average over the last three years, Perennial International Limited has shrunk earnings per share by 41% each year (measured with a line of best fit). Its revenue is down -4.1% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Perennial International Limited Been A Good Investment?
Given the total loss of 48% over three years, many shareholders in Perennial International Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Perennial International Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Perennial International (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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